Fannie Mae's big payoff: $59B sent to Feds

As of June 30, Fannie will have paid Treasury $95 billion in dividend payments. | AP Photo

As of June 30, Fannie will have paid Treasury $95 billion in dividend payments under its conservatorship agreement while Treasury will still hold $117 billion in preferred shares in the company.

Should the government keep control of the companies for another 10 years, the Obama administration budget projects taxpayers could get $51 billion more back from Fannie and Freddie than the $187 billion they put into the two firms.

Text Size

-

+

reset

A Treasury Department official confirmed that the funds returned by Fannie and Freddie will be deposited into the general fund and will be factored into how long the department can continue to pay the government’s bills before running up against the debt ceiling.

The $59 billion Fannie will send, combined with the $7 billion Freddie said it would pay the Treasury by June 30, would likely push back the date when the government will breach the debt ceiling until October, if it is not raised before then, the Bipartisan Policy Center said today.

Laurie Goodman, a top analyst at Amherst Securities, said rising home prices, coupled with higher fees Fannie and Freddie charge new homebuyers, will keep the companies profitable for some time.

"I think the profits are sustainable. They have raised [fees] very, very considerably," Goodman said in an interview. "And bad loans are running off."

What to do with the cash once the dividend payments exceed the bailouts could add an unexpected dimension to the debate and has caused some to fear that the government may look to sell off its controlling stake in the two companies.

A bill introduced earlier in the year by a bipartisan group of senators led by Bob Corker (R-Tenn.) and Elizabeth Warren (D-Mass.) would prevent the Treasury Department from selling its shares in Fannie and Freddie until a new mortgage financing system is in place.

"Those are all issues for policymakers to address," Mayopoulos said.

This article first appeared on POLITICO Pro at 10:19 a.m. on May 9, 2013.